Friday, July 5, 2013

Why the Delay of the Employer Mandate is a Big Deal

This is from Chris Conover at Forbes in an article entitled News Flash: 45% Of Working Uninsured Are In Large Firms Subject To Employer Mandate

...[N]early half of the nation’s nearly 28 million uninsured workers are employed by the very firms mandated to provide health coverage. ...

[t]he delay of the employer mandate is a far bigger deal than champions of Obamacare would have you believe. Not only will it affect millions more workers than implied by the 95% coverage figure, but it also will greatly complicate the task faced by exchanges which have the responsibility of figuring out who is eligible for subsidies. Without employers reporting on who is eligible for their health benefits or its actuarial value, how will an exchange know whether low-wage worker X employed by company Y is eligible to receive subsidized coverage? Will they rely on an honor system whereby employees self-attest their own eligibility? Given that the exchange subsidies are measured in thousands of dollars and the rampant fraud we already see in programs such as SNAP (formerly known as  Food Stamps) and Medicaid, good luck with that. Will they have to set up a “pay-and-chase” system using random audits to track down and penalize those who have been less than honest? And leave fraud aside entirely: how will exchanges deal with many millions of workers who may themselves have no idea whether they qualify for subsidized coverage?

In short, the delay of the employer mandate did not necessarily avert a train wreck: it may actually contribute to the slow-motion train wreck now in progress. Everyone is now waiting for another shoe to drop: delaying the entire law for at least one year may well turn out to be the most sensible course of action.